Ormat Heats Up On Geothermal

With U.S. oil prices around $95 a barrel, alternative sources of energy continue to represent an attractive investment. Ormat Technologies (ORA) in Reno, Nev., is one company that is poised to reap the rewards. Ormat builds, owns, and operates geothermal and recovered energy power plants and equipment. Its current operations extend from the United States to Guatemala, Nicaragua, and Kenya.

Nations are increasingly looking to diversify away from fossil fuels.

And nuclear power has taken a hit from the disaster at Japan’s Fukushima plant, in addition to reports of lax nuclear regulation in the United States.

So Ormat is in the sweet spot of renewable energy. Geothermal energy is more available than any other renewable source. Geothermal plants don’t need any fuel and emit almost no pollutants. The biggest issues are the lengthy construction process of geothermal plants and finding the best heat resources.

Good news is rolling in for Ormat. The company recently garnered a partial guarantee from the U.S. Energy Department for up to $350 million in loans for a geothermal power project in Nevada.

And it secured a contract valued at about $20 million to supply a geothermal power plant to Norske Skog Tasman of New Zealand, a pulp maker. That represents the 13th geothermal power plant built by Ormat in New Zealand.

Earnings drop

The company reported a net loss of $8.97 million in the first quarter, but that stemmed largely from problems with just one project. Revenue rose 18 percent in the quarter to $78.27 million from $66.11 million a year earlier.

Strength in the company’s electricity and product units sparked the increase. “Facilities added in the past year and the performance of most of our plants translated into growth in generation and revenue,” CEO Dita Bronicki said in a statement.

Of 16 analysts surveyed by Thomson/First Call, four rate Ormat a strong buy, nine rate it a hold, two an underperform, and one a sell.

With U.S. oil prices around $95 a barrel, alternative sources of energy continue to represent an attractive investment. Ormat Technologies (ORA) in Reno, Nev., is one company that is poised to reap the rewards. Ormat builds, owns, and operates geothermal and recovered...